Form 4 Transaction Codes
Every insider transaction on SEC Form 4 carries a code. These codes separate true open-market buying and selling from compensation, option exercise, tax withholding, gifts, and other ownership changes.
Open-Market Purchase
Signal: Bullish
The insider voluntarily bought shares on the open market using personal capital. This is the highest-conviction insider signal — it represents real money at risk with no automatic or scheduled trigger.
Open-Market Sale
Signal: Bearish
The insider voluntarily sold shares on the open market. High signal when it is a discretionary sale not tied to a 10b5-1 plan. Must be interpreted in context of the insider's total holdings.
Option Exercise
Signal: Neutral
The insider exercised previously granted stock options. Often followed by a same-day or next-day Code S sale to cover the cost or tax obligation. Alone it is not a reliable directional signal.
Tax Withholding
Signal: Neutral
Shares automatically withheld by the company to cover income tax upon RSU vesting. This is a mechanical, non-discretionary transaction — commonly mistaken as insider selling by retail investors.
Grant / Award
Signal: Neutral
Shares granted by the company as compensation — RSUs, performance shares, or other equity awards. Not a market purchase. Does not reflect insider conviction about stock direction.
Disposition to Issuer
Signal: Neutral
Shares returned to the company, typically to cover the exercise price of options or under a buyback program directed at insiders. Low directional relevance on its own.
Gift
Signal: Neutral
Shares donated to a charitable organization or gifted to a family member. Not a market transaction and should be excluded from capital flow analysis.
Other (Non-Standard)
Signal: Verify
Catch-all code for transactions that do not fit standard categories — inherited shares, court-ordered transfers, or other unusual events. Always read the footnotes in the EDGAR filing for context.